Ministry to soon issue new mining divestment rule
Monday, January 23 2017 - 05:00 AM WIB
Petromindo
The Ministry of Energy and Mineral Resources is expected to issue this week a new ministerial regulation on the divestment of mining companies owned or controlled by foreign investors including PT Freeport Indonesia.
?God Willing, hopefully (to be issued this week),? said Director General of Mineral and Coal Bambang Gatot Ariyono on Saturday following a meeting with Vice Minister of Energy and Mineral Resources Arcandra Tahar.
Meanwhile, Kontan quoted Arcandra as saying that among of the important points of the upcoming new rule is that the price of the shares to be divested must be based on fair market price. ?The new regulation will be issued soon,? he said.
He added that companies such as PT Freeport, a local subsidiary of US-based Freeport McMoRan Copper & Gold Inc, can?t include the existing gold and copper reserves at its mine in Papua until 2041 in calculating the price of the shares to be divested as its existing contract will expire in 2021 while the government has yet to extend the contract.
According to existing regulations, mining firms owned by foreign investors are required to gradually divest up to 51 percent of their shares to Indonesian investors after five years of production. But progress of the mandatory divestment program has been moving very slowly.
The government recently launched a new Government Regulation No 1/2017 allowing miners to continue export of mineral concentrates on certain conditions including implementing the divestment program.
PT Freeport has been required to divest up 20 percent stake in the first stage. The government currently owns 9.36 percent stake in the company, and thus the company plans to divest another 10.64 percent stake. The company last year offered a price of US$1.7 billion for the 10.64 percent stake, but the government has said it is too expensive, insisting a much lower price of $630 million. PT Freeport?s price is based on the assumption that the company?s operation will continue until 2041, instead of only until 2021 as stated in the current contract.
Editing by Reiner Simanjuntak